Real Estate Investment Strategies in Sapporo

As part of our guide to buying real estate in Sapporo, we present our research on the most popular real estate investments in Hokkaido.

Based on hundreds of requests from our clients in Hokkaido, real estate investors want to know about:

— Types of Income-Generating Investment Property in Sapporo
— Buying Single-Unit Condominiums in Sapporo for Investment
— Buying Single-Family, Detached Homes in Sapporo for Investment
— Buying Single-Family, Detached Homes in Otaru for Investment
— Buying Multi-Family Homes in Sapporo for Investment
— Buying Sapporo Apartment Buildings for Investment
— Short-term Accommodation and Minpaku Investment Businesses in Hokkaido
— Buying a Vacation Home in Sapporo as an Investment
— Off-Market Properties for Investment in Sapporo
— Resale Value of Real Estate in Sapporo
— Loans for Real Estate in Sapporo

We will touch on each of these topics below.

For help finding the ideal property for investment in Sapporo, contact us. We will introduce you to real estate agents that specialize in investment properties here in Hokkaido.

Types of Income-Generating Investment Property in Sapporo

Hokkaido has many real estate investment opportunities; you can find all of the types of revenue-generating property in Sapporo that you would find in other markets. Below we will discuss using condominiums as rentals in Sapporo, buying detached houses for rentals, small multi-family rentals like duplexes, large multi-family apartment buildings in Sapporo that are for sale to investors, and more.

We will briefly suggest the most obvious investment strategies for each type of Hokkaido real estate, and address some related concepts like accommodation management, property management, unlisted off-market property in Hokkaido, and the difficulty of finding a loan for real estate investment in Hokkaido.

Buying Single-Unit Condominiums in Sapporo for Investment

— Pricing: 5 – 500 MM JPY (and up)
— Strategy: Long-term leases to local Japanese renters

For a relatively easy entry into real estate investment in Sapporo, buying a condominium to be used as a rental property is a common place to begin. The strategy is to buy a condominium (what the Japanese call “mansion”) and to rent that unit to local Japanese tenants, with traditional two-year leases, collecting rental income at standard local monthly rental rates. There are Sapporo condominiums for sale as low as 5,000,000 JPY, relatively convenient condos in older buildings for 10,000,000 JPY, nicer modern condominiums in Sapporo for 20,000,000 – 50,000,000 JPY and up.

Compared to houses, commercial units, and single-block properties, condominiums sold as single-units are not only cheaper, but also easier to manage… Condominiums are usually looked after by management companies, which ensure the common corridor and entrance are clean, and the lifts are well maintained.
— Takebayashi Tomohiro, from Winning Strategies for Japan Real Estate Investment

There are a lot of multi-unit buildings in this city, including condominiums in Sapporo for investment. There are many condos for sale, in a variety of locations including new, high-end, luxury condominiums located close to the Odori or Sapporo stations.

Many owners and tenants in Sapporo prefer newly constructed rental units. This kind of investment condo in Sapporo exists, but would tend to come at a higher purchase price, and thus a lower cap rate and return. Buying investment condominiums in Sapporo that are farther from the city center can be done at lower purchase prices, potentially generating higher investment returns (although they may be harder to rent).

Many local Sapporo real estate investors prefer buying condominiums in a building with a maximum of four floors, and without the inclusion of an elevator. The additional maintenance cost of an elevator tends to decrease returns – buildings with elevators are commonly avoided by one class of investor.

For foreign owners of real estate, local Sapporo property management companies are available to manage tenants and pay local bills.

Buying Single-Family, Detached Homes in Sapporo for Investment

Most people in central Sapporo live in apartment buildings or condominiums, but Sapporo has a lot of detached homes for sale, particularly compared to other large cities in Japan. The investment strategy would be to buy a home for sale in Sapporo, and rent it to local tenants on traditional two-year leases. Because single family homes are less common, and there are fewer single-family homes for rent in Sapporo, owners of detached homes for investment in Sapporo may have an easier time keeping those units rented. The purchase price for single family homes in many of Sapporo’s central wards would start above 20,000,000 JPY, and will be nicer and more central at 30,000,000 JPY and above.

Because Sapporo detached homes may include parking, tenants may often own a car, and may be willing to live farther outside of central Sapporo (perhaps preferring a quieter community, or easy access to skiing, onsen, or nature). It may be possible to find more remote rental houses for sale in Sapporo near the 15,000,000-25,000,000 JPY price range that can generate the rent required to create higher cap rates.

Buying Single-Family, Detached Homes in Otaru for Investment

Otaru is a separate city in Hokkaido, about 30 minutes from Sapporo. For investors that want to buy a detached home in Hokkaido for under 20,000,000 JPY, Otaru investment real estate offers less access to downtown Sapporo, but may offer lower prices. Another Hokkaido real estate investment strategy might be to buy a single-family home in Otaru, and rent to local Japanese tenants on typical two-year leases. There are fewer jobs in Otaru, and more single-family homes, so keeping the home at full occupancy may be more difficult than a similar investment in central Sapporo.

There are also opportunities to buy Otaru detached houses and rent them to local and foreign tourists with a short-term accommodation rental model (more below). That model is possible, but is more work (and requires more fees if you need help with management). As Otaru is a much smaller city, finding property management companies in Otaru to manage the property may be difficult (particularly for older, low priced, or more remote properties).

Otaru’s population is small and declining, however, it is a picturesque city with strong appeal for tourism in the green season, and decent access to local skiing, as well as the Niseko region, in the snowy season.

The Hokkaido shinkansen will also route through Otaru, connecting to both Sapporo and Niseko (slated to be completed in 2033). The additional fast access to Otaru could provide more interest in that community and increase the value of rental properties in Otaru in the future.

Buying Multi-Family Homes in Sapporo for Investment

There are also smaller, multi-unit, multi-family homes for sale in Sapporo. There are duplexes for sale in Sapporo, and other similar multi-family rental properties that could support multiple tenants on the same property, but are not as expensive as apartment complexes in Hokkaido. These multi-unit investment properties in Sapporo provide the opportunity to live in one unit (even part time), and to rent the other unit(s) out to local Japanese tenants on traditional two-year leases. For foreigners that want to buy property in Sapporo, and stay in Hokkaido a few months per year, while still earning rental income from tenants, this is another possible investment scenario. Small multi-family properties for sale might be found in the range of 20,000,000 for older properties, to 50,000,000 JPY or more for bigger, nicer properties, in better locations, with more rental units.

When Sapporo multi-family properties offer parking, can accommodate pets, and/or offer some outdoor space for kids or gardening, these rare features can create even more demand, higher rent, and are easier to lease when vacancies occur. Having multiple rental units in Sapporo also helps guarantee at least some income from the property; even if one unit is empty, the remaining units may continue to generate income.

For foreigners that own rental property in Hokkaido, these properties can be ideal. If one unit is used for vacation for several years, and the owner decides to spend less time in Sapporo, that unit can easily be converted to a rental unit, perhaps even using the owner’s furnishings, making it a furnished rental (furnished rentals in Sapporo can be a great investment).

Sapporo property managers can help take care of the property, pay local bills, serve as a domestic contact for real estate in Japan, prepare the owner’s unit before a visit, and keep the building occupied with tenants.

Buying Sapporo Apartment Buildings for Investment

For investors that are ready for a larger opportunity, you can buy entire apartment buildings in Sapporo. Because most residents in Sapporo live in apartments, there are a lot of rental apartment buildings in Sapporo. Depending on the size, location, age, and quality of the building, you can buy large rental properties in Sapporo for 20,000,000 JPY up. For a two-unit older building, maybe 20,000,000 JPY is possible. For an eight-unit older building in a reasonably central neighborhood, maybe 50,000,000 JPY is possible. For 20 units in a nice location, reasonably new building, maybe 200,000,000 is a more accurate estimate of the cost to buy a whole Sapporo apartment building.

At any given time, there are large rental properties and apartment complexes in Sapporo for sale. Because there are so many factors that contribute to the price of investment property, working with a real estate agent in Sapporo that specializes in income-generating property is a recommended first step – contact us for an introduction.

Short-Term Accommodation and Minpaku Businesses in Sapporo

Each of the different types of properties for investment in Sapporo could, in theory, be used for a short-term accommodation investment, what the Japanese call “minpaku.” The strategy here would be to buy a property, and instead of renting for typical two-year leases at the local rates, the investor rents it to tourists for a few days or weeks at a time, at much higher nightly rates. For many investors, a platform like Airbnb can help market the property, but local management is still a part of a minpaku business in Sapporo.

This minpaku rental business model in Hokkaido is a popular request, and there are many short-term vacation rental businesses operating in Sapporo and nearby cities.

There is also a lot of demand from clients that want to buy a property in Sapporo, use it a few times per year, and rent it out the rest of the time to help recoup the initial investment or to generate income. Unless you live in Hokkaido and can manage the business yourself, you will need local help marketing the unit, preparing it for guests, helping guests check in and out, dealing with trash (and other local requirements), cleaning the unit, working with neighbors, etc. It is easier to both rent the unit and to find help to manage the unit, when the property is newer, higher quality, centrally located, and in excellent condition.

For properties that are not in prime locations, or for older properties, finding a local Sapporo accommodation manager to take on the property can be a challenge. While there are many minpaku managers in Hokkaido, most of those companies service properties owned by Japanese nationals, they provide service in Japanese, and rent to Japanese guests. For foreigners, especially that require service in English and other languages, finding turn-key accommodation managers is much more difficult. Properties that are not in central locations, and that don’t command high rents, are difficult to service.

Many buyers with dreams of purchasing Japanese akiya to use as vacation property rentals in Sapporo discover that doing business at a lower budget, or outside of central locations, particularly if they don’t speak Japanese, is more difficult than they imagined.

Buying a Vacation Home in Sapporo as an Investment

Buying a vacation home is not necessarily an investment strategy, but many buyers realize a profit when they sell their vacation property in Sapporo for more than the initial purchase price.

Most real estate investors want monthly income from their properties, and those strategies have been discussed above. However, for some owners that buy a Sapporo vacation home, an increase in the value of the real estate may generate a return as the property is sold.

Off-Market Properties for Investment in Sapporo

There are many websites that list real estate in Japan, including some that include investment properties in Sapporo and other cities. However, buying real estate for investment in Hokkaido is perhaps the best example of when a relationship with a local real estate agent is a huge advantage; having an agent is highly recommended.

In working with local Hokkaido real estate brokers, we know that 50 – 70% of real estate is sold in off-market transactions. There are many valuable properties that are never listed online, and are traded within private sales made possible by the personal connections of local Sapporo real estate agents.

By working with a local agent with real estate investment experience, you can receive guidance as you buy your investment property, and may also have access to off-market property in Sapporo that cannot be found online. While dual agency property transactions can be a disadvantage when buying a personal residence, many of the most profitable real estate investments in Hokkaido are arranged by well-connected local real estate brokers (who then earn a commission from both sides of the deal). If you want these valuable local Sapporo properties, working with a local broker is often the only way to buy those properties.

Resale Value of Real Estate in Sapporo

While “house-flipping” is not a common strategy in Hokkaido, there are investors that buy property as a monthly rental property or a vacation home, personally use the property for several years, and then resell the property for a profit.

Historically, property in Japan has less appreciation than in other countries. For many years, there was negative appreciation in markets like Tokyo, or “stagflation” where prices remained the same, year after year. However, since 2021, prices have been increasing in many markets in Japan. Hokkaido has notably strong appreciation, in many cases, often in the top-five regions in Japan for growth in property prices. The price of land in Sapporo has shown strong appreciation in most recent years.

While the Japanese don’t appreciate the value of older physical structures such as houses and buildings, land prices can and do increase in value.

Loans for Real Estate in Sapporo

Many foreigners are interested in a loan to buy investment property in Sapporo. Even though many investment properties generate local income that can pay off debt for the mortgage, Japanese banks generally do not lend money to investors that do not live or otherwise already do business in Japan.

If you live in Japan, particularly if you have an ongoing job with a large Japanese company or employer, there may be loan options available for you. If you do not live in Japan, and if it is your first investment property in Japan, plan on paying cash.

If you already own a portfolio of investment property in Hokkaido (or anywhere in Japan), you may be able to borrow against your equity in another property. For instance, if you own a home in a central location in Tokyo, and want to borrow against the value of that property, you may be able to use that equity from that loan toward an all-cash purchase of investment property in Hokkaido.

Real Estate Brokers for Investment Property in Sapporo

We have helped many clients buy high-yield Sapporo rental properties. When you are ready to invest in real estate in Hokkaido, contact us, and we will introduce you a local real estate agent that specializes in Sapporo real estate investment strategies.

We work for you, not the real estate companies.

We provide person-to-person introductions to prescreened agents that help you sell, buy, lease, or rent property in Hokkaido. We search our custom database to connect you to real estate professionals that speak your language, address your needs and are available now to help you find what you want.

Local. Trusted. 100% free to you.

To Get Started

1. Contact Us

For More Information:

— See our piece about various Taxes in Japan
— Our detailed Guide to Paying Property Taxes in Japan
— We provide a list of Sapporo Tax Offices
— In Hokkaido, there are areas with special rates for property taxes
— Our review of the role of Property Management Companies in Sapporo
— Buying Property in Hokkaido as a Foreigner
— Our list of Tax Accountants for Expats Living in Japan
— Our complete guide for Buying a House in Sapporo
— Our report on How to Rent an Apartment in Sapporo and Move-In Costs for Sapporo Apartments
— Find Lawyers in Hokkaido
— Tax representatives in Japan
— Services that Help Foreigners Buy International Real Estate

See also:
— A guide to the concept of Domestic Contacts in Japanese Real Estate
— Off-market Properties in Osaka